Should the unemployment survey be updated?

posted at 1:01 pm on October 6, 2012 by Jazz Shaw

Once upon a time – back in the “good old days” when jobs were considerably more plentiful – the monthly unemployment figures released by the Bureau of Labor Statistics (BLS) were barely noted by the majority of Americans. (Assuming, that is, that they were aware of them at all.) If unemployment is down around five percent and it goes up to 5.2 in July and down to 4.8 in October, nobody notices. As Ed Morrissey pointed out yesterday, such shifts can be accounted for by seasonal variations in labor demand, localized effects in particular industries or, as we probably saw this week, an outlier in the BLS home survey.

But these days the statistics draw a lot of attention – and heat – particularly in the run up to a national election. Depending which way they shift, the published number becomes a headline for one party and a headache for the other. So can they be be improved to more accurately reflect reality on a consistent basis? And perhaps more importantly, would it be worth the effort to do so?

For a quick review, this Policymic article provides an excellent breakdown of how the government arrives at the published number each month.

The government releases two big employment surveys on the first Friday of every month. The first is the Current Employment Statistics survey, normally called the “payroll survey.” CES surveys 140,000 business and government agencies nationwide (except Puerto Rico and other U.S. territories). It notes number of employees, hours worked, and salaries earned. It also logs employment by gender and whether the positions are full or part time with some specificity.

Also important is what the CES doesn’t count. CES omits not only contract workers – like me – but also farm workers, many of whom are migrants. Interestingly, CES also excludes workers on strike through the 12th of a month. For example, the latest unemployment number for Chicago could be nearly 30,000 people higher because the Chicago Teachers Union went on strike between September 10th and 19th.

The “household survey” (or Current Population Survey) is conducted by the BLS and the Census Bureau, together with state government agencies. The survey calls or visits around 60,000 households and asks to speak with the head of household (over 16 years old). After surveying whether a person is working or seeking work, CPS asks supplementary questions covering things such as tobacco use and voting patterns.

As noted, the payroll survey may be a little better over the long run, but it has some problems of its own. It ignores a number of segments of employees entirely and is still, after all, a survey, with its own possibilities for anomalous numbers. Further, it is only able to speak to the number of people actually employed at any given time, regardless of population figures, how many are looking, retired, ill, etc.

But the household survey is clearly fraught with even more problems, and improving the quality of the data appears to be a daunting task. First of all, as Ed pointed out, they are only surveying 60K households in a nation containing hundreds of millions of people. And we’re not just talking about a slice of the population the size of “likely voters” here. They need to estimate statistics for every adult in the nation who has or is looking for a job. From my recent interviews with pollsters, I can tell you that this sample size and methodology would have to be classified has having a huge margin of error in any honest analysis. But how could it be improved?

First of all, the survey is not just done by BLS workers. It’s conducted in conjunction with the census bureau. And how many people would they need to interview to produce more statistically meaningful results? Ten times as many? Polling professionals will tell you that it’s hard to get people to complete even a moderate size survey. Take a look at the current survey being used. The labor statistics section alone is more than 20 pages long. If you wanted to get a vastly larger sample, the government would need to be calling millions of people every month. It could turn an already bloated bureaucracy into an unmanageable behemoth.

And in the end, what would it get us? Let’s face it… even in the current climate, the only people who really care about this figure are interested in it for either politics or journalism. For the average American, how many other people do or don’t have a job pales in comparison to the question of whether or not they have one. Do you really want to pay that high a price for better data points?

Let’s face it… America isn’t a police state. (Not yet, anyway.) The government has no ability to track each and every adult and see who is getting up each day to go to work, where they go and how much they earn. And I doubt many of you would want them to have that power. Maybe we just need to accept the facts and educate voters to know that these numbers involve a lot of guesswork, smoke and mirrors. We can watch the long term trends and probably get a general idea as to whether employment is getting better or worse over time, but the month to month numbers are, in the end, little more than fodder for yet another political parlor game.

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Yes, but just who would you trust in dc to update it? It seems the whole blooming bunch wants bho to look good on jobs come he!! or high water? They all LIE! But the good news, WE KNOW they are lying!
L

We can watch the long term trends and probably get a general idea as to whether employment is getting better or worse over time, but the month to month numbers are, in the end, little more than fodder for yet another political parlor game.

The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.

They sure do. Romney is up to 47% on RCP, his highest number EVER. We know the polls are cooked, we know the employment numbers are cooked. That which they can’t cook (like the deaths in Afghanistan) the MSM simply ignores, but we know that too.

And they can’t stop enthusiasm. The more the MSM lies, the more Republicans are going to turn out.

It’s very easy to manipulate numbers and trends especially large ones where a minor change in methodology and/or assumption can produce dramatically different results.

The argument that someone would blow the whistle immediately is not valid. That’s not how things work in the real world. Government employees know their life will be destroyed by the Obama regime if they came out and testified before Congress. Look how long it took for someone to blow the whistle on F&F and we are talking gun trafficking, not spreadsheets.

What’s my evidence that the number was manipulated? The number IS the evidence. It’s impossible to get a big number like that in light of all the other economic data. There was a month during the Reagan years that had a big number, but GDP growth was 9% and there were many months with much bigger job creation numbers than what we have today.

Ya, Jazz, but the household survey has margin of error of ready…400,000 acoording to one of teh Fox News business reporters…in other wors it’s garbage…people saying yes if they are mployed but are “self-employed” (right, sitting at home to answer the phone) or saying they had 2 or 3 part time jobs to make ends met and that’s counted as 3 full jobs….unbelievable. the real number they should be talking about is the U6, now at over 14%.

I don’t know, but the main thing is that even if unemployment was at 5% we have plenty of other issues to carry the day for this election.
Critically, the deficit and borrowing from China, as expressed by Romney during the debate. And the $90 billion wasted on solar and wind. Plus the crony supporting Stimulus. And look at gas in CA and the possibility of an energy catastrophe with breakdowns in the electrical grid thanks to O’s disservice, as with coal! Indeed, the issues that Romney brought up during the debate should serve as a blueprint for the rest of the campaign.
But obviously now the imperative for Romney is raising money $$. Donate! And spread the word about the need to donate.

The BLS is full of Democratic operatives just like the pentagon is full of Muslim Brotherhood operatives.

The February rate will be 10% for no reason other then Mitt Romney gets the president’s daily briefings use of of a corner less office and a fancy airplane. It will take time to rid the BLS, EPA, DoJ and the Pentagon of Democratic and Muslim Brotherhood operatives. It could take the whole 113th and 114th congress to find and fix the unknown damage that the democratic appointees can and did do in the last 4 years and lame duck time before they are replaced.

Please, when you take people out of the workforce, you are playing with the numbers for the sake of someones agenda! Nobody has left the workforce! Those same people are still looking for income. It’s just another way politicians feed the public a bunch of “Bovine Excrement” in order to cover for their ineptitude or the failure of their Ideology!
Final Update for those following:How to take on the Obama Enemy media: http://paratisiusa.blogspot.com/2012/09/an-open-letter-to-those-who-should-know.html?spref=tw

I can’t see how we could get a 0.3% drop in one month with only 114,000 jobs created.

Liam on October 6, 2012 at 1:25 PM

The 114,000 figure for net job growth comes from the establishment survey; unemployment figures come from the household survey, which claimed (accurately or not) net job growth of 873,000 in September.

An important thing to remember is that, holding the labor force participation rate constant at the level of January 2009, the U-3 rate would have reached a high of 11.4% in December 2009 and thereafter fluctuated between 10.7% and 11.4%, with a value of 11.2% in August 2012. Even though the official U-3 rate shows a peak of 10.0% in October 2010 declining to 8.1% in August 2012, this seeming improvement was almost entirely the result of people dropping out of the labor force.

DOL Secretary Hilda Solis announced the September Unemployment numbers previously reported were “factually incorrect”. Solis said the DOL has added a new classification to the employment survey. The new employment status is “transitionally employed”. Recalculating the employment numbers with the new classification reduced the overall unemployment number to 1.4%. These “transitionally employed” are by their very name jobs being created and will be added to the Administrations “saved or created” total since 2009 of 167 million jobs.

Vice President Biden was quoted, after hearing the Solis announcement, as saying “Sweet mother of….this is a big effing deal!!” The Obama re-elect machine at ABC is said to be readying a new 30 second spot with the new numbers from Solis.

Jazz makes the case that it would serve us all to better educate the electorate.

Maybe we just need to accept the facts and educate voters to know that these numbers involve a lot of guesswork, smoke and mirrors.

That sounds great, except we can’t seem to get the electorate to apply themselves and so much as learn how the federal government functions.

When asked simple questions, like ‘What are the three branches of the federal government?’ It is appalling how many people can’t answer the question correctly.

Yet, these same people vote, or, at least, are allowed to vote, should they choose to turn off the television, or get off the bar stool, and wander into their polling place and cast their ballot for the candidate, or sound bite, of their choice.

A lot of other conventions associated with unemployment, don’t suit our usual thinking on unemployment, and statistic making.

Usual trends can’t be used with long term industry wide shut downs, like the one that affected the “Rust belt” to begin with, unemployment has mostly been since the 1950′s something that individuals cured by finding another job…in six months or so.

Foreclosure laws are based around a year of hard times not two or three years without a job.

Unemployment checks were limited to 26 weeks. They have been extended during this recovery to up to 99 weeks.

Time limits on welfare and food stamps are a perfect example. They are being circumvented, by calling this an emergency. Which, “if you have no job…it’s a depression,” like they say.

But the current trends press the statistics themselves, and create imperfect pictures. The U-6 includes people who are “marginally attached” a strange term which means, would like to work and are available to work, but are not engaged in continual looking…as when you phone in to the unemployment office and report what jobs you applied for last week in order to get an unemployment check.

Jazz, Jazz, Jazz. You’re going about this all wrong! There’s a perfectly legit government operation that already has this information! It’s called the IRS.

Look, every time a company fills a job, they *must* submit paperwork, specifically an I-9, a W-4, and an SS-5. These tell the IRS about the employee. The number of these submitted is the actual number of jobs created.

For contractors and the self-employed, it’s harder to find the numbers in realtime, but .. the number of EIN (Employer ID Numbers) issued is a possible proxy. It certainly would give the BLS a better place to start asking than their current random matrix.

It’s not going to be perfect, but beating the drum about the police state, when D.C. *already has this information* is .. well, ignorance or apathy applies.

Something is really wrong when barely enough jobs are created to keep up with new people coming into the work force, and our Ministry of Truth is simultaneously declaring that the unemployment rate has gone down by the largest amount in 29 years.

Perhaps the regime is now defining work to include smoking cessation classes, massage, and bed rest just like they’re doing for welfare recipients.

Unemployment is a ‘snapshot’ of a monthly view of those just counted in the unemployment rolls for those seeking work.

That is only a meaningful number with a historical workforce participation rate shown over time. Plot those both out over a decade, and any single snapshot of what they are now can show what the actual workforce participation rate as part of population is. With such a low participation rate for the post-war period as we have now, unemployment will be a statistic subject to a lot of noise until labor participation is much higher towards traditional norms.

The worrying part is that decadal review of workforce participation rate is its decline, which is pointing to a major structural change which is making the economy less viable for having a large active workforce. This points to something that has been done via policies and regulation that is reducing the ability of people to enter and stay in the workforce over time: technical changes and efficiency changes are things the workforce adapts to, but inefficiency and overhead drag down the ability to actually keep people hired due to the cost of overhead.

Basically you can’t boil down where the economy is without at least five or six different longer term graphs, of which unemployment is just a snapshot that must be understood in context with the rest of the economy. To get out of the current low participation rate will require expanding the economic capacity of the economy, and that will get higher unemployment as the participation rate increases. Thus a ‘bad’ statistic (unemployment) would be masking the ‘good’ statistic (improving participation of labor in the economy). Right now the reverse is being touted that low unemployment is ‘good’ while masking the longer term ‘bad’ statistic (participation rate of labor). Put the statistics in context so that noisy ones can be filtered out by the longer term trends. Those trends are horrible right now, but the glad-handers want to press ‘good’ statistics to mask it, and that is vile.

This post ignores what I consider to be the most important problem. The claim of four milion new jobs sounds wonderful to many people who ignore the fact that it doesn’t keep up with population or working age population growth.

I’m supposed to believe that an economy that is close to dropping into another recession, chugging along with a nearly 0% GDP somehow managed to created 800,000+ jobs in September (Most in 29 years)? You can’t be serious!

Look, if the socialists can get away (with no resistance) with putting the untouchable IRS in charge of healthcare, why worry about their ability to play with a few numbers about jobs.

They’ll just do it anyway. The contempt for the rule of law and separation of branches of power isn’t met with equal boldness and contempt of them (thanks GOP)so don’t get excited about these more trivial abuses.

The problem is the government isn’t trustworthy. It’s corrupt and any and all statistics released are nothing more than propaganda for the Regime. It has become completely loyal to the ruler, Barack HUSSEIN Obama.

Yesterday’s fantasy of an unemployment “report” could have been predicted by anyone months or even years ago that the “final” unemployment report before “Hussein’s last election” would push the number below 8% no matter what they had to do. It will be revised upwards later, but after the election, of course.

Basically numbers released by the government aren’t to be believed, and thus, there is no reason for we, the taxpayer, to pay them to produce them. Get rid of the departments that produce this propaganda and instead make Hussein have to pay for his OWN propaganda ministry.

This post ignores what I consider to be the most important problem. The claim of four milion new jobs sounds wonderful to many people who ignore the fact that it doesn’t keep up with population or working age population growth.

burt on October 6, 2012 at 2:04 PM

Right, but the administration’s figure of 4 million new jobs starts counting from the trough of employment. From January 2009 to September 2012, the total number of employed decreased by 61,000 (-0.05%) according to the establishment survey (which is the one used to determine net job growth, or increased by 787,000 (0.55%) according to the establishment survey (after last month’s amazing number). Over this same period, the civilian population (meaning everyone age 16 or older who isn’t in the military or institutionalized) has increased by 9.1 million (3.9%).

Seems like tracking the unemployed by the current system misses the big picture of how many able bodied folks are taxpayer funemployment dependents who no longer show up as ‘unemployed’ because funemployment is just ‘easier’.

The new “in thing” is getting welfare from the taxpayer, including future generations of taxpayers since about 40% of spending currently is on a future generation credit card.

After all, what’s the big deal if a couple people get part time jobs while lots folks have stopped looking for work and jumped onto the funemployment entitlement parade of free health care, discounted housing, Obamaphones, free foodstamps that buy all sorts of stuff besides food, tax credits for those who pay no taxes and more?

The funemployment dependent number has done nothing under Obama but go up and up and up. The number of taxpayer dependents is the driving force of our deficits and debt. It should not be overlooked that a fair number of the employed also are part of the entitlement parade of taxpayer dependents, even while employed.

Wigglesworth I’m thinking the same thing, this happened right after Obama relaxed welfare work requirements if a state gets its unemployment below a certain level. Now sitting at home cruising the internet can be ‘computer training’ employment.

The government has no ability to track each and every adult and see who is getting up each day to go to work, where they go and how much they earn.

Actually, yes, the government does. In the form pf payroll taxes. Simple arithmetic, really. Show payroll tax receipts in August and then in September. 2 simple numbers. Not exact science numbers, but as close to reality as it gets.

Actually, the household survey doesn’t ever ask directly if the head of household is employed. That is deduced from other questions.

The real problem is that it makes no distinction between a person with a full time permanent job and one who last month auctioned off his Autographed Bon Jovi Sweat Sock collection on eBay for beer money, or the newspaper carrier who works an hour each morning. All are considered “working.”

But statistical anomalies do occur, it is true. When a survey is this far off – anyone buying we set a one-month 29 year record for jobs only days after Bernanke announces the Fed will be pumping unlimited cash into the system for the next three years BECAUSE the jobs market is weak and getting weaker? – it is entirely fair to notice the convenient timing.

Especially when the beneficiary is such a corrupt and cynical lying narcissist like Obama.

I hope when President Romney is in office, he goes back to the “old way” to calculate unemployment, showing the REAL unemployment and what an uphill job HE has to do in order to fix the BIG MESS Obama will have left him… It will also show the nation how bad Obama REALLY was, economically speaking…

Doing the math, it looks like the 60k sample size gets the result within 0.25% of the true value 95% of the time. To get within 0.1% of the true value 95% of the time, the sample size would have to be quadrupled.

First and foremost, STOP! worshiping the U3 rate and start at least mentioning equally the U6 rate or better yet, stop talking just rates and give actual numbers–give the whole picture with equal weight and importance. Romney finally mentioned the 23 million disenfranchised which is what should be mentioned until we’re sick of hearing it bcuz maybe those are the people–not the special and highly touted “independent” voters–who are gonna make the difference in this election. Oh and it appears that part-time jobs were what made the U3 rate go down but a part-time isn’t equal to a full-time job and shouldn’t be counted equally. Also if part-time jobs are going to be included for the sake of reducing the U3 rate then the numbers of the disenfranchised should be included in the totals that the rate is computed on. It’s all about how the numbers are computed, interpreted and touted and it’s all just crappy biased cherry-picking.

Komerad Solis cooked the books.
We expected it.
There will be no investigation…Komerad Holder said so.
The MSM will not call them on it.
They have to get Barry re-elected…their futures depend on it.
Screw em….Just VOTE R on 11/6….or sooner.
My Mom, a D, who passed away in June, voted for Romney yesterday…/s

The federal government is now reporting phony numbers for both unemployment and inflation.

Some of the laughably fraudulent (if it wasn’t so serious) consequences of this false reporting are:

1. When jobs are eliminated, “unemployment” reported by the government goes DOWN.

2. While food, clothing, and energy are major costs to every household in the nation (all with double-digit increases over the past few years), NONE of these things are counted in “inflation” reported by the government.

Pretty soon there will be major Internet buzz if our government actually tells the truth about something!

Let’s see, Hilda Solis, Secretary of Labor, will lose her job if Obama loses his. Let’s see, the bureaucrats that Solis hires, that conduct the survey, are predominately Obama contributors who will probably lose their jobs if Hilda loses hers.

The real problem is that when a very substantial portion of the population, including portions of the financial establishment, stop believing the government’s official proclamations on basic things like labor and inflation statistics, that government begins to lose its legitimacy. And besides force, legitimacy is all a government really has.